| Mon 27 Feb 2006, 12:22 | | Metboard/Growthpoint - Joint Offer |
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GRT MPL
GRT MPL
Metboard/Growthpoint - Joint Offer
Metboard Properties Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/005425/06)
Share code: MPL & ISIN: ZAE000014874
("Metboard")
GROWTHPOINT PROPERTIES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1987/004988/06)
Share code: GRT & ISIN: ZAE000037669
("Growthpoint")
GROWTHPOINT OFFER TO ACQUIRE ALL THE ISSUED LINKED UNITS OF METBOARD OTHER
THAN THOSE ALREADY HELD BY GROWTHPOINT
1. INTRODUCTION
The holders of linked units in Metboard ("the Metboard linked unitholders")
are advised that Growthpoint has submitted to the board of directors of
Metboard ("Metboard board") an offer ("the offer") to acquire all the
issued linked units of Metboard other than those already held by
Growthpoint ("the proposed transaction").
Growthpoint"s intention is to implement the proposed transaction by way of
a scheme of arrangement ("the scheme") in terms of section 311 of the
Companies Act, 1973 (Act 61 of 1973), as amended (the "Act"), to be
proposed by Growthpoint, between Metboard and the Metboard linked
unitholders, apart from Growthpoint, to acquire all of the Metboard linked
units held by such Metboard linked unitholders ("scheme linked units").
Since a Metboard linked unit comprises of one ordinary share in Metboard
linked to one debenture issued by Metboard, the scheme will be one which is
proposed between Metboard and its shareholders, apart from Growthpoint, as
well as between Metboard and a class of its creditors, being the holders of
the debentures which are linked to the shares in Metboard held by its
shareholders, apart from Growthpoint, which shareholders and creditors are
one and the same ("scheme members").
The scheme is subject to the conditions precedent set out in paragraph 6
below. Should the scheme be sanctioned and implemented, Growthpoint will
acquire the scheme linked units in exchange for the scheme consideration as
set out in paragraph 2 below. As a result of the implementation of the
scheme, Metboard will become a wholly-owned subsidiary of Growthpoint and
the listing of the Metboard linked units on the JSE Limited ("JSE") will be
terminated.
In the event of the scheme not being implemented, Growthpoint may, in its
sole discretion, make a substitute offer to all Metboard linked unitholders
in terms of section 440K of the Act upon the same terms as contained in the
scheme, which substitute offer would be conditional on Growthpoint
obtaining acceptances in respect of so many of the Metboard linked units in
issue which together with the Metboard linked units already held by
Growthpoint, will constitute Growthpoint as the holder of more than 50% of
the total Metboard linked units in issue. This condition may be waived by
Growthpoint at its election. Growthpoint currently holds 49 289 200
Metboard linked units representing approximately 17.6% of the total issued
Metboard linked units.
2. THE SCHEME CONSIDERATION
If the scheme is sanctioned and implemented, Metboard linked unitholders,
apart from Growthpoint, recorded as such in the register on the record date
of the scheme, who will be entitled to participate in the scheme ("scheme
participants") will receive 1 new Growthpoint linked unit for every 1.9
Metboard linked units held ("exchange ratio"), rounded to the nearest whole
number ("scheme consideration").
Due to the different financial year-ends of Metboard and Growthpoint a
special interim distribution ("special distribution") will be paid by
Metboard and Growthpoint immediately prior to settling the scheme
consideration with Metboard linked unitholders ("operative date of the
scheme"). The special distribution will include the unpaid distribution
that will have accrued at the operative date of the scheme. The special
distribution will ensure that both the Metboard and Growthpoint linked
units will be ex-distribution at the operative date of the scheme.
Each scheme participant, recorded as such on the register on the record
date of the scheme will be entitled to receive the scheme consideration.
The scheme consideration represents a premium of 16.0% to the daily volume
weighted average price of the Metboard linked unit price of R6.03 on 23
February 2006, being the last trading day prior to the offer being
submitted to the Metboard board. At the exchange ratio it is calculated
that Metboard linked unitholders will not be diluted in terms of their
distributions to 31 March 2007.
3. RATIONALE FOR THE PROPOSED TRANSACTION
The expected benefits of the proposed transaction are set out below.
3.1 Growthpoint
Growthpoint"s stated objective is to offer investors geographically
and sectorally diversified exposure to physical property assets
underpinned by long-term, sustainable, escalating income streams. The
Growthpoint property portfolio is currently underweight in industrial
properties and the proposed transaction provides a unique opportunity
for Growthpoint to acquire a significant industrial property portfolio
that with the expected synergistic benefits of the proposed
transaction, are expected to increase Growthpoint"s future
distributions.
The proposed transaction will continue to diversify the overall risk
within the Growthpoint property portfolio.
3.2 Metboard linked unitholders
Pursuant to the implementation of the proposed transaction, Metboard
linked unitholders will benefit as follows:
* the scheme consideration provides Metboard linked unitholders
with an upfront capital premium without diluting anticipated
distributions for the year ending 31 March 2007;
* the combined Growthpoint and Metboard property portfolio ("the
combined portfolio") is better diversified and will provide
Metboard linked unitholders with exposure to other property
sectors;
* the scheme consideration, settled in Growthpoint linked units,
will ensure that Metboard linked unitholders participate in any
increase in the Growthpoint linked unit price due to any increase
in future distributions available from the combined portfolio;
* the combined portfolio is anticipated to attract better debt
funding rates than those of Metboard and increase the
competitiveness of the combined portfolio to acquire further
industrial property; and
* the continuity of Metboard"s management will ensure the continued
focus on industrial property within the combined portfolio.
4. OPINION AND RECOMMENDATIONS
The Metboard Board has appointed Ernst & Young Corporate Finance
(Proprietary) Limited as the independent financial adviser ("the
independent adviser") to advise on whether the terms and conditions of the
proposed transaction are fair and reasonable to Metboard linked
unitholders. The independent adviser has determined that the proposed
transaction is fair and reasonable to Metboard linked unitholders and
details of the opinion of the independent adviser will be provided in the
circular to be posted to Metboard linked unitholders.
The Metboard Board have considered the terms and conditions of the proposed
transaction and, inter alia, the opinion of Ernst & Young, and are of
theunanimous opinion that those terms and conditions are fair and
reasonable to linked unitholders. Accordingly, the Metboard Board support
the scheme and recommends that linked unitholders vote in favour of the
scheme.
5. PRO FORMA FINANCIAL EFFECTS OF THE PROPOSED TRANSACTION
5.1 Growthpoint
The proposed transaction is a category 3 transaction for Growthpoint
and the table below sets out the unaudited pro forma financial effects
of the proposed transaction on a Growthpoint linked unitholder based
on the last published interim results of Growthpoint for the six month
period to 31 December 2005. The unaudited pro forma financial effects
have been prepared for illustrative purposes only, in order to provide
information on how the proposed transaction might affect the financial
results and position of a Growthpoint linked unitholder and, because
of its nature, may not give a true reflection of the actual financial
effects of the proposed transaction.
Before the After the
Per Growthpoint proposed proposed
linked unit Notes transaction transaction Change
(cents) (cents) %
Earnings 1 0.0 10.5 26097.0
Headline earnings 1 (2.1) 3.9 285.9
Distributable earnings and
distributions 1 39.1 38.9 (0.6)
Net asset value 2 799.8 868.3 8.6
Notes:
1. The "Before" column reflects the earnings, headline earnings,
distributable earnings and distributions per Growthpoint linked unit
for the six months ended 31 December 2005, calculated on the basis of
the weighted average number of 702.9 million Growthpoint linked units
in issue throughout the period. The "After" column assumes that the
proposed transaction was implemented with effect from 1 July 2005 and
it incorporates Growthpoint"s share of the earnings of Metboard for
the six months ended 30 September 2005, after adjusting for the
Metboard distribution of 19.8 cents on the 49.3 million Metboard
linked units already held by Growthpoint, and based on a total
weighted average number of 824.2 million Growthpoint linked units in
issue.
2. The "Before" column reflects the net asset value per Growthpoint
linked unit as at 31 December 2005 based on 702.9 million Growthpoint
linked units in issue. The "After" column assumes that the scheme was
implemented on 31 December 2005 and incorporates the additional 121.3
new Growthpoint linked units issued in terms of the scheme
consideration at the closing market price of the Growthpoint linked
units on 23 February 2006.
3. The proposed transaction is expected to be distribution enhancing for
Growthpoint linked unitholders for the following reasons:
* the anticipated synergistic benefits of the proposed transaction
and in particular due to Growthpoint"s ability to obtain finance
at more competitive rates than Metboard; and
* after adjusting for Metboard"s interim distribution which is
47.5% of the rolling 12-month distribution for the period ended
30 September 2005 whilst Growthpoint"s interim distribution is
50.9% of the rolling 12-month distributions for the period ended
31 December 2005.
5.2 Metboard
The table below sets out the unaudited pro forma financial effects of
the proposed transaction on a Metboard linked unitholder based on the
last published interim results of Metboard for the six month period to
30 September 2005. The unaudited pro forma financial effects have been
prepared for illustrative purposes only, in order to provide
information on how the proposed transaction might affect the financial
results and position of a Metboard linked unitholder and, because of
its nature, may not give a true reflection of the actual financial
effects of the proposed transaction.
Before the Before the After the
proposed proposed proposed
transaction transaction transaction
per Metboard 1.9 Metboard 1 Growthpoint
Notes linked unit linked units linked unit Change
(cents) (cents) (cents) %
Attributable market
value
- Market price 1 603 1 146 1 329 16.0
- 30-day weighted
average price 2 565 1 074 1 205 12.3
Distributable earnings
and distributions 3 19.8 37.6 38.9 3.4
Net asset value 4 370.7 704.3 877.7 24.6
Notes:
1. The market price is based on the daily volume weighted average price
of the Metboard and the Growthpoint linked units on 23 February 2006,
being the closing date before the offer was submitted to the Metboard
board.
2. The 30-day weighted average price is based on the closing prices of
the Metboard and the Growthpoint linked units for the relevant period
up to an including 23 February 2006.
3. The "Before" column reflects the distributable earnings and
distributions of the Metboard linked units for the six months ended 30
September 2005, calculated on the basis of the weighted average number
of 279.7 million Metboard linked units in issue throughout the period.
The "After" column assumes that the proposed transaction was
implemented with effect from 1 April 2005 and represents the
distributable earnings and distributions for 1.9 Metboard linked units
based on the distributable earnings and distributions for 1 new
Growthpoint linked unit for the period from 1 July 2005 to 31 December
2005.
4. The "Before" column reflects the net asset value of the Metboard
linked units at 30 September 2005, and is based on 279.7 million
Metboard linked units in issue at 30 September 2005. The "After"
column assumes that the proposed transaction was implemented with
effect from 30 September 2005 and represents the net asset value for
1.9 Metboard linked units based on the net asset value for 1 new
Growthpoint linked unit at 31 December 2005.
6. CONDITIONS PRECEDENT
The scheme is subject to the fulfilment of various conditions precedent
before it becomes operative, as set out below:
* The scheme being approved by:
- a majority representing three-fourths of the votes exercisable by
the scheme members; and
- a majority representing three-fourths in value of the debentures
held by the scheme members, who are present and voting, either
in person or by proxy, at the scheme meeting, as is required in
terms of sections 311(2)(a) and 311(2)(b) of the Act;
* the scheme being sanctioned by the High Court of South Africa;
* a certified copy of the Orders of Court sanctioning the scheme being
registered by the Registrar of Companies in terms of the Act; and
* approval of the Securities Regulation Panel ("SRP"), JSE, the South
African Reserve Bank, the Competition Authorities and any other
regulatory authorities, to the extent required.
7. FURTHER ANNOUNCEMENTS AND DOCUMENTATION
An announcement setting out the salient dates of the scheme will be made on
or about 24 March 2006. A circular, providing further information on the
scheme and containing, inter alia, a notice of the scheme meeting, a form
of proxy and a form of surrender, is expected to be posted to Metboard
linked unitholders on or about 24 March 2006.
These times and dates are subject to change. Any change will be announced
on SENS and published in the press.
Johannesburg
27 February 2006
Investment bank to Growthpoint
Investec Corporate Finance
Investec Bank Limited
(Registration number 1969/004763/06)
Sponsor to Growthpoint
Investec Bank Limited
(Registration number 1969/004763/06)
Legal adviser to Growthpoint
JOWELL GLYN & MARAIS
Independent advisor and lead sponsor to Metboard
Ernst & Young Corporate Finance (Pty) Ltd
(Registration number 2000/031575/07)
Sponsor to Metboard
Investec Bank Limited
(Registration number 1969/004763/06)
Legal adviser to the scheme
Fluxmans Attorneys
Website: www.fluxmans.com
Fluxmans Inc. Registration No: 2000/024775/21
Reporting accountants
Ernst & Young
Chartered Accountants (SA)
(Registered Accountants and Auditors)
Metboard debenture trustee
Knowles Husain Lindsay Inc Attorneys
(Registration number 2000/000004/21)
Date: 27/02/2006 12:22:21 PM Produced by the JSE SENS Department
